ECB's Draghi expects no disasters from bank health checks

Reuters

PARIS, Oct 2 (Reuters) - European Central Bank PresidentMario Draghi said on Wednesday he expected no disasters to cometo light in forthcoming financial health checks on the region'sbanks, which would be rigorous.

The ECB is scheduled to take over supervision of the banksin about a year, and a resolution mechanism to deal with problemlenders should follow in 2015.

Before that, the central bank of the 17-member euro zone isto conduct an asset quality review, followed by stress tests, toensure that banks enter common supervision in good health.

Draghi said a backstop needed to be in place to handlepotential fallout from the twin reviews, and added that detailsof the test procedure would be given later this month.

"The whole exercise of the asset quality review and thebalance sheet assessment and the stress tests make sense only ifthey are credible," Draghi said.

"...I don't expect major disasters, but it's quite importantthat full light be shed and full transparency be there," he tolda news conference after the ECB left interest rates unchanged.

Asked about the state of the Spanish banking sector, Draghisaid that the country had made good progress in fixing its banksafter it applied for aid from its European partners.

"Everything seems to suggest that Spain will approach thisexercise well-equipped, but of course it is very difficult toguess what will happen with individual banks," he said.

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